Coal India production, offtake fall as power sector demand weakens

Coal India has reported lower production and offtake in April-January FY26, with analysts linking decline to reduced coal consumption by thermal power plants amid muted power demand, rising renewables

State-owned miner Coal India Ltd (CIL) has reported a 2 per cent drop in production and a 3 per cent drop in offtake for the April–January period of the current financial year, even as the company has been hoping to turn around the ongoing slump in key physical performance metrics.

 

What do the latest production and offtake numbers show? 

CIL’s coal offtake continued to decline during the first ten months of FY26, which experts believe reflects moderation in coal consumption by thermal power plants amid lower capacity utilisation. The miner’s total coal production declined 2 per cent to 609 million tonnes, while offtake fell 3 per cent during the April 2025 to January 2026 period to 612.1 million tonnes.

 

How did Coal India perform in January 2026? 

In January 2026, coal offtake dropped 4.7 per cent year-on-year to 66.3 million tonnes, even as production rose 2.6 per cent to 79.8 million tonnes, indicating a widening gap between output and dispatches during the month. Lower coal offtake reflects subdued utilisation levels at thermal power plants during the fiscal so far, according to Ankit Jain, vice-president and co-group head, corporate ratings at ICRA Ltd.

 

Why has coal demand from power plants softened? 

“There has been a decline in plant load factor (PLF) of thermal power plants in the nine months of FY26 against the nine months of FY25, largely due to an increase in renewable generation capacity and moderation in power demand growth owing to weather-related factors such as early and extended monsoons, which, in turn, impacted coal consumption by power plants,” Jain said.

 

Between April and November, power demand growth was muted, which lowered thermal capacity utilisation and, in turn, coal consumption by power plants, he added. Jain also said rising renewable energy capacity has contributed to lower thermal PLFs, reducing coal requirements from the power sector, which is the largest consumer of domestic coal.

 

How do lower PLFs affect coal production decisions? 

He explained that moderation in coal offtake typically feeds back into production decisions through supply agreements between coal companies and power generators. “Power plants sign fuel supply agreements based on expected PLF levels. If PLFs fall and inventory starts building up at plants, generators tend to reduce coal offtake over time, which then leads to moderation in coal production at the mines,” Jain said.

 

Under such agreements, power producers have the flexibility to lower coal offtake volumes within permissible limits without penalties, allowing them to avoid excessive inventory build-up and manage working capital more efficiently, he added.

 

What do subsidiary-wise trends indicate? 

Subsidiary-wise data shows divergent trends within Coal India. South Eastern Coalfields recorded a 7.6 per cent increase in cumulative production during the April–January period, while Northern Coalfields reported broadly flat output. However, major producers such as Mahanadi Coalfields, Western Coalfields and Bharat Coking Coal posted year-on-year declines in both production and offtake.